Arbitration Denied Again In Class Action Against Car Dealer

A Florida appeals court last month affirmed a lower court’s determination that a putative class action brought against a car dealership is not subject to arbitration. The court said that a sales contract superseded a retail purchasing agreement with an arbitration clause that had been previously signed. The per curiam opinion from the First District denied a motion for rehearing and certification from appellant HHH Motors LLP, which does business as Hyundai of Orange Park.

Customers Jenny Lee Holt and Kristopher P. Holt filed the class action alleging violations of Florida’s Deceptive and Unfair Trade Practice Act in regard to electronic titling/registration filing fees charged by HHH Motors. HHH Motors moved to compel arbitration based on a provision in the retail purchase agreement signed in 2010 for the Holts’ purchase of a 2007 Dodge Ram truck. The trial court denied the motion, concluding that a retail installment sales contract containing a merger clause and signed immediately after the purchase agreement constituted the formation of a new contract.

The court ruled that the installment contract to finance the purchase and that lacked an arbitration clause, superseded the purchase agreement. The court’s opinion said “And because the [financing contract] appeared facially complete, no parol evidence could be considered to address alleged ambiguities.”

Public Justice Executive Director Paul Bland, who argued the Plaintiffs’ case, said the ruling correctly held that there must be an agreement between the parties to submit to arbitration and that the court, not an arbitrator, must make that determination. Paul told Law360 in an interview:

The car dealer here wants to skip over these basic protections — they want to jump right into forcing people into arbitration whether there is an agreement or not.”

HHH Motors argued that it met all of the elements needed to compel arbitration, holding that its right to arbitration vested when the purchase agreement was signed and was not affected by any subsequent pacts. As in the trial court’s decision, however, the appeals panel points to language in the financing agreement that said, “[B]y signing this contract, you choose to buy the vehicle on credit under the agreements on the front and back of this contract.” The panel agreed with the trial court’s conclusion that the financing agreement and its merger clause was “sufficiently unequivocal” to negate the purchase agreement’s arbitration clause. HHH Motors is being held to the language of its own concurrently signed documents. The First District’s opinion said: “If it intended for credit buyers to be subject to the arbitration clause, then it could have said so in the [financing agreement], but did not.”

The appeals panel did not dispute HHH Motors’ argument that two or more documents executed concurrently by the same parties in the same transaction should be read and construed together, but it said there was no dispute that the financing agreement was signed second and found no legal error in the trial court’s conclusions.

The First District also rejected HHH Motors’ argument in its motion for rehearing that its ruling conflicts with the Fourth District’s decision in Morse Operations Inc. v. Sonar Radio Corp., noting that the financing agreement in that case did not feature a merger clause. the appeals panel said:

The absence of a merger clause justified a different result, there being ‘no support in the record for the trial court’s conclusion that the financing agreement superseded the underlying contract for this transaction.

Seeing no conflict, the First District declined to certify the matter as a question of great public importance, but said it was providing its opinion to explain its reasoning for potential future use in that area of the law. The Plaintiffs are represented by William C. Bielecky, Deanna L. Blair of Jacksonville Area Legal Aid, Paul Bland of Public Justice and Brian W. Warwick of Varnell & Warwick PA. The case is in the First District Court of Appeal of Florida.